Tag: whitepaper

The Energy Transition – Outlook and Implications for Upstream Commodities

“Tackling climate change is one of the world’s top priorities. In 2019, a survey of more than 30,000 people from 28 countries revealed that more than half believed climate change was “very” or “quite” likely to bring about the extinction of the human race. At the same time, it is widely acknowledged that energy access…
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Don’t Blame COVID-19, Just Embrace Shale 2.0

“By now it should be abundantly clear that the current shale oil business model does not work – even for the very best companies in the industry. With oil prices below $30 per barrel again, for the second time in four years, and with share prices down at least 50-80% this year alone, the largest…
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The Crucible Report – Separating Truth From Fiction In The Natural Gas Market

“Natural gas is everyone’s favorite commodity to hate. As recently as mid-October, natural gas prices had fallen 30% in 2019, and the stock prices of many natural gas producers are down between 50-80% for the year. No wonder they call natural gas “the widow maker.” Speculative positioning in the commodity and the stocks reflect a…
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Shale Gas Inventory: Problem or Opportunity? – Why Investors Are Wrong About Long-Term Natural Gas Fundamentals

“Natural gas and renewables represent the long-term future of the energy business. While coal and oil demand will not be eliminated anytime soon, they will continue to lose share over time. This transition will meaningfully reduce CO2 emissions and improve air quality, particularly in emerging market economies. Unlike shale oil, which is higher-cost globally and…
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Houston, We Have a Problem – Free Cash Flow, Net Asset Values and the Agency Question

“Recent carnage in public E&P land is accelerating debates around the sustainability of current business models as well as the methodologies used to value those businesses. While the industry has walked back from the capital outspend ledge, at least for the moment, we still see analyst reports highlighting EBITDA multiples and forward multiple compression. Acreage…
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The Shale 2.0 Press Release

“Dear Public E&P Companies, If you haven’t noticed yet, the public equity markets are broken. The price discovery mechanism is not functioning properly due in large part to the growing influence of quantitative and passive strategies, which now represent as much as 85% of daily trading volume in many securities. As a result, many publicly-traded…
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Shale 2.0 – Revisited a Year Later

“Just one year ago, we wrote about the need for E&P management teams and boards to become more returns-focused. Indeed, since the start of the shale revolution, the industry has spent too much capital on projects that have generated unacceptable returns. Making matters worse, a significant portion of that capital was financed with debt. In…
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Shale Technology: Moore’s Law or Turgot’s?

“In the last decade, we have witnessed seismic changes in the oil and gas industry, particularly regarding the economics of North American unconventional production. A significant portion of these advances have been attributed to technology, which many observers expect to be a continued source of deflation into the future. In this paper, we attempt to…
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Shale 2.0 – The Promised Land?

“Speaking recently at an investor conference, Anadarko Petroleum CEO Al Walker had some interesting thoughts regarding the current state of the U.S. oil and gas industry. Here is what he said to investors: ‘The biggest problem our industry faces today is you guys. You don’t reward capital efficiency, you reward growth. When you guys stop…
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Life in the Echo Chamber

“For the U.S. E&P industry, production growth is the hallmark of success, and that mandate is reinforced by almost every constituent. For many, “Drill, baby, drill” isn’t a joke, it’s a business plan. This is evident from management commentaries, with one leading CEO quoted as saying, “the shareholders back us to grow production, and that’s…
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